On Knowledge

You mention learning. What kind of knowledge is required for good judgment?

The homology for this is how the human organism works--making sure we get the right amount of oxygenated blood to the various chambers of the heard at the right time, in the right rhythm, and in the right places. There are four areas of knowledge that are critical to making good versus bad decisions: self-knowledge, social-network knowledge, organizational knowledge, and stakeholder knowledge.

Self-knowledge has to do with self-awareness, learning about your own biases, your own leanings, ambitions, limitations and strengths. And you don't just get that through psychoanalysis. You must get it through various sources and direct reports.

An example we use in the book is George W. Bush, after he returned from his first trip to the Middle East before the March 2003 invasion of Iraq. Bush met with Brit Hume on Fox News, who said he was surprised that the president seemed taken aback by the amount of Arab hostility to the U.S. "Where do you get your news from?" Hume asked the president. And Bush responded, "Well, I get my information from objective sources." Hume asked, who are they? Bush, with a straight face and without a trace of irony, said "from my direct reports." Compare that to the way other national leaders or CEOs get their information. Think of President Franklin Roosevelt: He drove his direct staff nuts because of the information he was getting from all sorts of back-corridor sources, even from talks with [CIA precursor] Office of Strategic Services people.

Second is social-network knowledge, the ability to recognize and assess the information that flows all around; in other words, keeping your ears to the ground. Why did [former New York Times executive editor] Hal Raines have to read a New Yorker piece by Ken Auletta, just before he was ousted, that showed everybody all his weak spots? And yet he seemed to be totally blind. How is it that Larry Summers, who was ousted as president from Harvard, who's smart as they come, was so tone-deaf and didn't listen? Social-network knowledge and self-knowledge are highly correlated, because who can know everything that's going on?

The third kind is knowledge of the organization itself. In a memo, Starbucks founder Howard Schultz said, in effect, "we have grown to 13,000 stores but have lost our soul." Where did he get this knowledge--with these 13,000 stores in the damnedest places--on what's going on in the organization? Howard Schultz should be proud of the way he has a feeling for what he thinks is going on. But he's also, in effect, scolding his direct reports for not keeping better tabs on what's happening in the company.

Is there such a thing as too much information? Can too much unfiltered information cloud judgment?

Yes, we can be confused. You can be flooded with options and become totally mystified. Blogging, along with all the other opportunities for getting information these days on the Internet, may make judgments harder to make. But the good news about all this information we can now access is that it's going to create more transparent organizations. I just don't think companies can keep information private, the way they used to.

IT tends to capture "hard data" such as transaction data, financial data and data about customers and processes.

All of those are useful.

But information systems and CIOs don't typically capture the kinds of knowledge you describe. Is this being overlooked by IT, and should IT help?

I think that's definitely true. Think about the forces that major companies have to deal with when making a major strategic decision or people decision. We have countless numbers of interdependencies. How can you make a good judgment if you can't read the environment? It has everything to do with the information going to the leaders.

IT is a very critical player in helping the different parts and people in an organization work together in as high a degree of connectivity as possible. It seems to me, like in the little poem, that we're all angels with only one wing; we can fly only while we embrace each other. Well, who does the embracing? Who does the interconnecting? This underscores the importance of the CIO and IT people. They have to be the absolute closest partners to the very top leadership team.

I was teasing earlier when I asked if there is such a thing as a chief relevance officer. Well frankly, I think that's what CIOs are. The main job of CIOs, it seems to me, is to provide knowledge in all four areas of knowledge. What information--if missed--could become a disaster? As Harold Hill said famously in the musical The Music Man, you got to know the territory.

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